What a country! What a state! Here we are getting more free money. The 2019 Permanent Fund is handing out $1,600 per Alaska resident. What parents do with this money can make a big impact on their children’s lives.
Gandhi said, “The future depends on what you do today.” Parents have the opportunity to save their child’s PFD and invest the funds in an education account. For example, if the PFD remained at $1,600 for the next 18 years and was invested each year and earned 6 percent compounded, the value of the account at the end of the 18 years, tax-free, would be over $52,000. If only half of the $1,600 per year was invested in an education account, the results would be over $26,000.
The University of Alaska 529 college plans earnings are tax-exempt and the plans can be used for vocational, technical or college. The 529 plan has an advertisement showing a young child saying, “I have three words regarding my PFD: Potential Future Degree. Let’s start putting my PFD to good use.”
Warren Buffett, billionaire CEO of Berkshire Hathaway Holding Co., in his annual report to shareholders, indicated that his financial success was primarily due to what he calls “the American tailwind.” He has been investing successfully for 77 years and is confident in the future American economy. We all have the opportunity to save and invest. Hopefully parents will invest in their children’s future.
• Larry is a retired state employee and aspiring golfer who resides in Juneau.